Assume that a new project will annually generate revenues $2,200,000. Cash expenses including both fixed and variable costs will be $700,000, and depreciation will increase by $ 22,000 per year. In addition, let's assume that the firm's marginal tax rate is 34%. Calculate the operating cash flows.

Assume that a new project will annually generate revenues $2,200,000. Cash expenses including both fixed and variable costs will be $700,000, and depreciation will increase by $ 22,000 per year. In addition, let's assume that the firm's marginal tax rate is 34%. Calculate the operating cash flows.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 7P: Your division is considering two investment projects, each of which requires an up-front expenditure...

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Assume that a new project will annually generate
revenues $2,200,000. Cash expenses including
both fixed and variable costs will be $700,000, and
depreciation will increase by $ 22,000 per year. In
addition, let's assume that the firm's marginal tax
rate is 34%.
Calculate the operating cash flows.

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